Let the Free Market Work (Editorial)

Whether or not another federal bailout for the airlines is in order, it’s clear that industry is a mess.

First it was hit with the economic slowdown that caused a downturn in business travel, then September 11, then the war with Iraq. The latest hit is the mysterious and highly contagious Severe Acute Respiratory Syndrome (SARS).

The House and the Senate have passed $3 billion-plus plans, but there are still differences between the two that must be worked out. And President Bush, at odds with the Republican-led Congress, wants an even smaller amount, about $1 billion, to help the industry through the war in Iraq.

Mitchell E. Daniels Jr., director of the Office of Management and Budget, said the amounts of money provided by the House and the Senate “are excessive.”

A compromise between the two houses is expected soon, but a veto is possible.

The airline industry has lost $18 billion since the Sept. 11, 2001, terrorist attacks, even after getting a $15 billion bailout. The Air Transport Association has estimated the airlines will lose about $11 billion this year. The ATA said industrywide traffic was down 10 percent the week the invasion of Iraq began and will be down 8 percent for the year.

It seems to some, apparently including President Bush, that another bailout will simply bring to a halt, or at least slow, any incentive to solve the industry’s systemwide problems.

The prolonged crisis has forced the airlines to make huge changes such as cutting capacity and trying to lower costs by renegotiating labor contracts and cutting less-efficient planes. They still have a ways to go since they allowed things to get out of hand during the high-flying days of the ’90s. Some consolidation may be needed.

The pilots, flight attendants and ground workers who got hefty raises during the glory days obviously don’t want pay cuts, but some have saved jobs — and possibly their companies.

While consumers, at least those who choose to fly, have benefited from the cheap fares that airlines have offered to entice more business, the day is coming soon when the airlines will have to do what every other business has to do: strike a balance between revenue and expense.

We recognize that a lot of the airlines’ woes are beyond their control, but we agree with the president: Any bailout should address only those factors over which the airlines have no control. Let the free market system work.